June Insights: Investing in a Low-Carbon Future

Despite global challenges, 2023 saw only a slight rise in energy-related CO2 emissions, increasing by just 1.1% to total 37.4 billion tonnes. This markedly slower pace of growth compared to previous years reflects the powerful impact of breakthroughs in clean energy technologies—including solar, wind, nuclear power, and electric vehicles. These technologies were particularly vital in offsetting the reduced output from hydropower, severely impacted by droughts in key regions like China and the United States. In a notable achievement, advanced economies reached a 50-year low in CO2 emissions, spurred by the vigorous expansion of renewable energy, a transition from coal to gas, advancements in energy efficiency, and scaled-back industrial production.

The Oil and Gas Industry's Role in Emissions

The oil and gas industry, which accounts for approximately 15% of total energy-related emissions, is increasingly under pressure to adopt more sustainable practices. Direct emissions from oil and gas operations (scope 1 and 2) are significant, and when combined with emissions from the use of these fuels, the sector’s contribution to global emissions is substantial. The International Energy Agency urged the industry to reduce emissions intensity by 50% by 2030 to meet Net Zero Emissions by 2050 Scenario. This goal requires an estimated $600 billion investment in critical areas such as methane management, flaring elimination, electrification of operations, carbon capture utilization and storage (CCUS), and the integration of low-emission hydrogen in refineries.

A significant portion of this investment is expected to come from the O&G industry. In 2022, member companies of the Oil and Gas Climate Initiative invested over $24 billion in low-carbon technologies, signalling a significant commitment to this transformation. Effective policy support, including incentives like tax credits, subsidies, and favorable regulatory conditions, will be crucial in enabling these investments.

Investment Dynamics in Carbon and Emissions Technologies

This requirement for increased investment comes at a critical time, as despite economic uncertainties that have broadly affected funding levels, investment in carbon and emissions reduction technologies remains vital.

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